Exam 12: Analyzing and Interpreting Financial Statements

Two companies made similar acquisitions of fixed assets during the past year, yet one company consistently reports a lower amortization expense.This is an example of which of the following limitations of financial ratios?

The shareholder's equity section of Killam Company contains the following accounts and amounts: ,50,000 outstanding \ 1,250,000 ,1,000,000 outstanding \ 2,500,000 Retained earnings \ 3,500,000 Net income \ 875,000 \ 100,000 dividends paid; \ 500,000 dividends paid What was Killam's return on equity closest too?

Which of the following is the best measure of performance that is independent of the way an entity is financed?

A user has decided to perform a horizontal analysis of Nanton Company.The year 2012 is used as the base year.Sales in 2012 were $4,250,000.Sales in 2013 and 2014 were $5,788,000 and $6,125,000, respectively.The trend data amount for 2014 for sales would be closest to?

A company's price-to-earnings (P/E) ratio reflects the market's perception of future growth prospects and risk.What does a high P/E ratio indicate with respect to each of those factors? Future Growth Risk A) High High B) High Low C) Low High D) Low High

Which of the following actions by a manager could be undertaken with the objective of ensuring that the company continues to meet its debt-to-equity debt covenant?

Entwhistle Ltd.supplied the following information for the years-ended December 31, 2013 and 2014: Current Assets: 2014 2013 Cash \ 15,000 16,750 Accounts Receivable 247,500 299,000 Inventory 275,000 166,250 Prepaid expenses 4,000 4,000 Current liabilities \5 41,500 \1 ,084,000 Net credit sales \ 2,400,000 \ 2,255,000 Purchases \ 1,700,000 \ 1,590,000 Entwhistle's credit terms are net 30 days. On average, Entwhistle has been collecting its accounts receivable:

A common size analysis of the balance sheet is most likely to signal investors that:

Kang's management has the option of converting $100,000 in debt into common shares of the company.What impact would the conversion have on the company's solvency as measured by the debt-to-total-assets and its liquidity as measured by the current ratio?

Which of the following statements regarding high quality earnings is true?

Which of the following is most likely to be classified as an unusual item?

What are revenues, expenses, gains and losses that are part of the normal operations of the firm, but that are not expected to occur frequently, called?

Which of the following is a benefit of using debt over equity as a source of long-term financing?

A company had accounts payable at the beginning of the year of $63,000 and at the end of the year of $69,000.Inventory at the beginning of the year was $102,000 and at the end of the year $118,000.Cost of sales for the year was $600,000.What was their accounts payable turnover ratio closest too?

What is Wang's gross margin closest to?

The following information is from Drayton Valley Company's December 31, 2014 and 2013, financial statements: Accounts receivable \ 80,000 \ 72,000 Inventory 56,000 70,000 Sales 380,000 372,000 Cost of goods sold 228,000 216,000 Net income 65,000 56,000 What are Drayton Valley's accounts receivables turnover and inventory turnover ratios closest to? A/R Inventory turnover turnover A) 2.85 3.96 B) 4.70 3.62 C) 5.00 3.62 D) 4.75 6.03

Leiminster Co.is analyzing the solvency of Acme Manufacturing and has collected the following data: Total debt \ 2,000 \ 1,900 \ 1,750 Total equity \ 4,000 \ 4,500 \ 5,000 Which of the following would be the most appropriate about Acme?

What is the another name for vertical analysis?

Which of the following would increase current income but decrease future income?

Indicate whether the following items would be reported as an operating cost or an unusual item in Kelly Corporation's income statement.If it is not unusual, state how the item should be recorded in the income statement. A) Loss attributable to labour strike.B) Loss on sale of mining equipment. C) Gain on the disposition of the company's retail operations.D) Loss from sale of FVTOCI securities. E) Expropriation of property by a foreign government.